Capital Market FAQs

1) What are the phases of the capital market of the Sultanate?

The capital Market of the Sultanate witnessed three main phases:

2) Muscat Securities Market: (1989-1998): With the increase in the number of companies the Government believed in establishing a regular market. Royal Decree No. 53/88 was issued establishing MSM and the actual inception of the market was in 1989.

3) Restructuring phase (1998 and thereafter): Royal Decrees were issued restructuring the capital market sector by dividing the functions of MSM into three entities namely the Capital Market Authority (CMA), MSM and Muscat Clearance and Depository Company (MCDC). CMA was established to act as independent regulatory body supervising the capital market.

2) What does monitoring mean?

In general term, monitoring means to control and direct. In Securities Market it means to control or direct the practices of entities dealing in Securities by establishing the framework and regulations regulating the dealings, and setting out instruction to be followed and penalties for violations of so.

3) What does transparency and disclosure means?

Disclosure is to present financial statements of the listed company on appropriate time, and fundamental information concerning external bodies that would help them in taking proper decisions. The company shall also disclose accounting methods followed in preparing financial statements and variables applied.

4) What is meant by subscription process?

Offering of shares for the first time to finance a newly listed company. In other words the company under formation or the company with new ideas and project for expansion but lacks liquidity can convert into public company owned by the public in consideration for financing. When the company offer its shares to the public and the investors buy the shares this is subscription process.

5) What does the prohibited periods (black-out periods) for Board members and senior executives mean?

The prohibited period is the period in which the board members, senior executives and their associates are not allowed to deal in any of the company’s securities during it.

6) What does “Insider Information” mean?

Insider information is any Material information that relates to a security, has not been disclosed to the public and if disclosed to the public it would have a material effect on the price of the security or on the investors’’ decisions or on the dealing trends of the market.

7) Are trades based on inside information allowed?

Investors are prohibited from making any trades for securities listed on the market on the basis of inside information that has not been disclosed, particularly during the following periods:

A-The period of time which no material information is disclosed to the public until the date of disclosure.

B-Closing period of the quarterly unaudited accounts which start from the end of the quarter until the disclosure date of financial statements.

C-Closing period of the annual accounts which start from the end of the financial year until the disclosure date of initial unaudited annual statements.

Any person who obtains inside information shall not facilitate to another person to obtain such information prior to disclosure.

8) What is a Prospectus?

Prospectus is the document provided by the companies to the Authority when offering securities. It shall include all the important, necessary and detailed information and data that help investors to make decision either to invest in the offered securities or not. It shall provide the required information in a clear and precise way without any irrelevant, inappropriate or misleading information.

9) What is speculation?

Speculation means buying and selling of securities in order to gain quick profits in the short term from the differences in prices or what is known as capital gains.

10) Do you need to be an expert in investment ways and tools to trade in the capital markets?

As an investor, it is not necessary to own any experience in the investment tools and methods. It is difficult to have all the investors in the market with such experience therefore the brokerage firms, investment funds and financial analysts are taking the role in order to help those investors to make investment decisions and invest on their behalf such as in the investment funds.

11) What is meant by manipulation in the market?

Market manipulation is to conduct any act or practice involving manipulation, deception, fraud or participating in any of them when trading in Security. There are various forms of manipulation, but all seek to achieve one goal which is to change a securitys price for the benefit of any party through fraud on others.

12) What does the process of corporate buying its own shares or “share repurchase” mean?

This process is the reacquisition by a company of a part of its own shares in its capital. The repurchased shares by the company are called “treasury shares”. This process leads to the reduction of the companys assets or to increase their commitments, therefore leads to a decline in property rights.